Courtesy of the Detroit Free Press
Here’s the tricky thing about justice: It feels good, but it doesn’t fix anything.
Ex-mayor Kwame Kilpatrick and crony Bobby Ferguson were convicted Monday on a host of corruption charges — racketeering, extortion, mail fraud, wire fraud — but no verdict can undo the damage Kilpatrick’s corrupt city hall did to Detroit.
I’m not talking about the symbolic damage of discovering that a bright, promising politician was corrupt, or the culture of mistrust and reputation for shady business that’s dogged Detroit, or the virtual paralysis of the region as Kilpatrick’s crimes were brought to light and the mayor was ousted from office.
I’m talking about the real, but likely incalculable, financial impact of Kilpatrick’s deceptive budgeting and mismanagement on the city of Detroit.
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Now, Detroit’s biggest problems — population decline and disinvestment — didn’t start with Kilpatrick. But they all got a lot worse after Kilpatrick took office in 2002.
When Detroit ran deficits Kilpatrick’s M.O. was simple: Issue debt to pay down the deficit (yeah, it doesn’t make sense to me, either), and craft budgets that were marvels of wishful thinking, filled with “if-come” savings or revenues that never materialized.
And when the budget came up short (which is easier to conceal if, like Kilpatrick, you never file your state-required year-end audits on time), issue more debt.
You can make it work, in the short term. But eventually, you hit a wall. And that’s what happened to Detroit.
Detroit started running $100-million-plus annual deficits in 2005, three years after Kilpatrick took office. That’s the same year then-Auditor General Joe Harris issued a blistering response to Kilpatrick’s proposed budget, in the last budget report of his 10-year term as auditor. Harris predicted then that the city’s practice of issuing long-term debt to cover short-term costs was at an end, and that the city would finally be forced to confront its structural budget deficit. But Harris was premature.
By the time Kilpatrick left office in 2008, even the practice of issuing short-term debt against incoming tax revenues (something most local governments do) stopped working for Detroit. A 2009 report by the Detroit City Council’s fiscal analyst described a broken system in which each year, the city was increasingly reliant on next year’s tax revenue to pay this year’s notes — $54.4 million in 2005, $125.2 million in 2006, $129.4 million in 2007, $129.6 million in 2008 — meaning that the city started each new fiscal year deeper and deeper in the hole.
So here we are in 2013. The city’s deficit keeps growing. About 35 to 42 cents of each general fund dollar is spent to pay the city’s debt, constricting Detroit’s ability to pay for even the most basic city services. Residents live with sub-par expectations, or, if they can afford to, pay out-of-pocket for services, on top of steep property and income taxes. Gov. Rick Snyder is expected to appoint an emergency financial manager in Detroit within days.
It’s hard to say how much of Detroit’s financial crisis can rightly be laid at Kilpatrick’s feet. But by any reckoning, the former mayor has a lot to answer for.